Kilkenny Capital Corporation
TSX VENTURE : KIK.P

Kilkenny Capital Corporation

August 16, 2012 09:00 ET

Signature of a Letter of Intent With CHS Resources Inc. for Qualifying Transaction

LAVAL, QUEBEC--(Marketwire - Aug. 16, 2012) - Kilkenny Capital Corporation (the "Corporation" or "Kilkenny")(TSX VENTURE:KIK.P) is pleased to announce the signature of a letter of intent dated August 13, 2012 with CHS Resources Inc. (the "Vendor") for the acquisition of interest in the Conviac's project, comprising all of the fifty-one (51) mining claims of the Conviac property located North of the Rivière Eastmain, in James Bay, Northern Québec (the "Properties") of the Vendor (the "Transaction"). The Transaction shall constitute an arm's length qualifying transaction within the meaning of Policy 2.4 - Capital Pool Companies of the TSX Venture Exchange's Corporate Finance Manual of the TSX Venture Exchange (the "Qualifying Transaction").

Concurrently with the completion of its Qualifying Transaction, the resulting issuer intends to make a non flow-through private placement of $250,000 and a flow-through private placement of $250,000 with many investors, subject to obtaining of all requisite regulatory approval, including that of the TSX Venture Exchange (the "Exchange").

THE PROPOSED QUALIFYING TRANSACTION

The Transaction shall constitute an arm's length Qualifying Transaction for the Corporation within the meaning of Policy 2.4 - Capital Pool Companies of the TSX Venture Exchange's Corporate Finance Manual of the Exchange and is subject to a number of conditions precedent, including a due diligence of the Vendor, a private placement described hereafter and the receipt of all requisite regulatory and corporate approvals, including that of the Exchange. The Qualifying Transaction is not subject to shareholder approval.

No sponsor has been retained in connection with the proposed Qualifying Transaction as contemplated by Policy 2.2 - Sponsorship and Sponsorship Requirements of the Exchange.

Pursuant to the Transaction, the Corporation shall purchase the Properties for a total consideration of $250,000, payable through the issuance of 2,500,000 class "A" common shares in the share capital of the Corporation (the "Common Shares"), for a price of $0.10 per Common Share and agrees to reimburse all recent exploration expenses related to Properties.

A finder's fee (the "Finder's Fee") shall be payable to Trans Globe Communications Inc. through the issuance of 250,000 Common Shares at a deemed price of $0.10 per Common Share.

ABOUT THE VENDOR

The Vendor was originally incorporated in British Columbia on March 6, 1981 under the name "Chutine Resources Inc." and was continued into Ontario on February 16, 1989. The Vendor changed its name to International CHS Resource Corporation on December 15, 1994 and to CHS Resources Inc. on December 15, 2010.

The Vendor has been a reporting issuer in British Columbia since 1985 and also in Alberta since 2000. It was initially listed on the VSE, from 1985 to 1998, when the VSE and the ASE merged to form the CDNX, and the listing transferred to the CDNX. Thereafter the listing was transferred to the Exchange when the CDNX was acquired by the TSE. The listing was relegated to the NEX Board in 2002, and then moved back to the TSX-V Tier 2 effective January 2005, where it remained for two years before being moved to the NEX Board and then, at the Vendor's instance, the listing was cancelled. The Vendor has constantly remained a reporting issuer in good standing in British Columbia and Alberta.

Between 1983 and 2007, the Vendor engaged in a number of exploration projects, including two major gold and copper/gold projects in Mexico, a gold project in France and gold, polymetallic and nickel projects in Ontario.

Properties

Alexandre Aubin, engineer, and Réjean Girard, geologist, have prepared a technical report (the "Technical Report"), according to Regulation 43-101 respecting standards of disclosure for mineral projects (the "Regulation 43-101"), with respect to the Properties. The Technical Report will be available for viewing under Corporation's profile on SEDAR at www.sedar.com. Mssrs Aubin and Girard are "Qualified Persons" for the purpose of Regulation 43-101 and are considered independent of the Corporation. The following information regarding the Properties is derived from the Technical Report.

The Conviac property consists of 51 contiguous map-designated cells, for an approximate surface area of 2,681 hectares (27 km2). The property is located within NTS 33B06 (Lac Baupaume) and 33B07 (Lac Conviac). Rectangular in shape, its boundaries are latitudes 52 degrees 23'00"and 52 degrees 24'30" north and longitudes 74 degrees 53'30" and 75 degrees 02'00" west. The center of the property is located about 90km to the east of the future Éléonore mine, currently under development by Goldcorp Inc.

The Technical Report will be filed with the Exchange as supporting documentation for the proposed Qualifying Transaction. Once the Technical Report has been reviewed, further detailed information regarding the Properties will be disclosed in a subsequent news release.

PRIVATE PLACEMENT

After the completion of the Qualifying Transaction, the resulting issuer shall have completed a flow-through private placement of $250,000 and a non flow-through private placement of a minimal of $100,000 and a maximum of $250,000 (the "Private Placement"). In consideration for the subscriptions received, the resulting issuer will issue non-flow-through Common Shares at a price of $0.10 per Common Share and flow-through Common Shares (as defined in the Income Tax Act (Canada) and Québec Tax Act) at a price of $0.13 per Common Share. Each Common Share issued pursuant to the financing will be subject to a mandatory holding period of four (4) months and one (1) day from the date of issuance of the Common Shares.

The resulting issuer shall pay a commission of up to ten percent (10%) of the gross proceeds, if any, of the Private Placement.

The Corporation will use the proceeds of the Private Placement to fund its working capital and to continue its exploration activities on the Properties.

PRO FORMA CAPITALIZATION

Once the Qualifying Transaction and the Private Placement are completed, a maximum aggregate of 12,873,076 Common Shares shall be issued and outstanding. The current shareholders of Kilkenny shall hold an aggregate of 5,700,000 Common Shares (44.28% of the issued and outstanding Common Shares). The Vendor shall hold an aggregate of 2,500,000 Common Shares issued as purchase price (19,42% of the issued and outstanding Common Shares) and subscribers to the Private Placement shall hold maximum of 4,423,076 Common Shares (34,36% of the issued and outstanding Common Shares). A Finder's Fee shall be payable to Trans Globe Communications Inc. through the issuance of 250,000 Common Shares (1,94% of the issued and outstanding Common shares).

The existing stock option plan of Kilkenny, whereby 570,000 options have been granted to certain officers and directors of Kilkenny will remain in force. The 200,000 options granted to the agent in the scope of Kilkenny's initial public offering will also remain in force.

BOARD OF DIRECTORS AND SENIOR MANAGEMENT OF THE RESULTING ISSUER

The Board of Directors of the resulting issuer shall be composed of a maximum of five (5) directors: three (3) of which shall be appointed by the Corporation, one (1) by the Vendor and one (1) shall be appointed by mutual agreement upon the Corporation and the Vendor.

After the completion of the Qualifying Transaction, the actual members of the Board of Directors of the Corporation, Mssrs Marcel Bergeron, André Goguen and David Grondin will sit on The Board of Directors of the resulting issuer.

In addition to a director to be appointed at the end of the Qualifying Transaction, the Corporation is pleased to announce the appointment of Mr. Bernard Laurent as a new member on the Board of Directors. These changes will be effective upon closing of the Qualifying Transaction.

Marcel Bergeron is a member of the Ordre des comptables agréés du Québec and of the Ordre des comptables en management accrédités du Québec. Mr Bergeron began his career with the accounting firm Petrie Raymond, LLP specialized in the SME sector. Following almost 30 years of practice and having held significant management positions, Mr. Bergeron left the firm to join Devimco Inc., a commercial real estate development corporation, as General Director from June 2006 to June 2009. Since 2009, Mr. Bergeron acts as financial consultant. In addition to his accomplished public accounting career, Mr. Bergeron also sits on the Board of Directors and Audit Committees of mining corporations, namely Strateco Resources Inc., TomaGold Corporation, Matamec Explorations Inc. and sat on the Board of Directors and Audit Committees of other mining corporations, namely MDN Inc., Jourdan Resources Inc. and Fairstar Explorations Inc. Mr. Bergeron is also the Vice President of Finance of Northern Precious Metals Management Inc. and he is the Chief Financial Officer of Nevado Resources Corporation (TSX-V: VDO).

André Goguen has completed a certificate in business management from HEC Montréal. Mr. Goguen from December 2006 to September 2009, was the President and a director of Laurent Venture Capital Corporation, a Capital Pool Company that completed its Qualifying Transaction and changed its name to Carbon2Green Corporation in 2009. Mr. Goguen is also the President and founder of Action Customs Services Inc., a Canadian and American licensed customs broker since 1992, and the President and founder of A.G.O. Transportation Inc., a freight forwarding company which provides international logistic services which was founded in 1993. Mr. Goguen is also a director of Carbon2Green Corporation (TSX-V: CGN). Mr. Goguen was also a director of FTM Investment Corporation, a Capital Pool Company listed on the Exchange that changed its name to Cagim Real Estate Corporation after completion of its Qualifying Transaction (TSX-V:CIM) from October 1998 to April 2004.

David Grondin is, since November 2007, President, CEO and director of NQ Exploration Inc. Previously, he served as an independent consultant in administration and corporate finance since 2000. He graduated with a Bachelor in Business Administration from Hautes Etudes Commerciales (HEC) in 2002. From 1997 until 2000, he was a financial analyst with CTI Capital Inc. Finally, since December 2010, he is President, CEO and director of TomaGold Corporation.

Bernard Laurent has been a director of the Vendor since 1991, and has been its Chairman and CEO since 1992. Since 1991 he has been the principal of B. Laurent & Co., a private investment management and consulting firm based in London, England. Mr. Laurent managed two diversified Development Capital Funds in France (Defi and D2I) and was a founder General Partner of End point Late-Stage Fund, L.P., a private equity fund (California). Prior to that he held senior executive positions at Bear Stearns & Co., Dillon Read & Co., and Charterhouse Bank Ltd. Mr Laurent has been a director/Chairman of a number of public and private companies in Europe and North America. Mr. Laurent was educated in France where he graduated and post graduated in political sciences (Sciences-Po, Paris 1972), business law (Université de Droit et d'Economie, 1974) and business administration (Institut d'Administration des Entreprises, 1975). He has been a resident of the UK since 1982.

SPECIFIC CONDITIONS RELATED TO THE CLOSING

The specific conditions that must be met in relation to the closing of the Qualifying Transaction are: (i) the resulting issuer must meet the minimum listing requirements of a Tier 2 issuer according to the Exchange policies up to and including the date on which the Exchange will issue its final approval; (ii) the completion of a due diligence and the analysis of the Vendor and the Properties shall be to the complete satisfaction of Kilkenny; (iii) the completion of the private placement shall be to the complete satisfaction of the parties; (iv) the execution of an asset purchase agreement regarding the purchase of the Properties shall be to the complete satisfaction of the parties; (v) the Transaction contemplated herein must be eligible as a Qualifying Transaction and must be accepted as such by the Exchange; and (vi) no material change must occur in the business and operations of the Vendors and of Kilkenny.

Completion of the Transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange Requirements, majority of the minority shareholder approval. Where applicable, the Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • For the Corporation:
    Marcel Bergeron
    President and Chief Executive Officer
    (514) 439-7787

    For the Vendor :
    Bernard Laurent
    President & Chief Executive Officer
    +44 (207) 235-4333